Food, Drink & Hospitality

Running a package travel business

How to comply with ATOL licensing and Package Travel Regulations 2018 when selling package holidays. Covers ATOL application, ATOL Protection Contributions, consumer cancellation rights, and complaints handling.

UK-wide
Guide summary

If you sell package holidays with flights, you must get an ATOL licence from the Civil Aviation Authority (CAA). If you sell any package travel, the Package Travel Regulations 2018 apply. You must follow rules for cancellations and complaints. Selling without an ATOL licence is a crime.

  • Get an ATOL licence if selling package holidays with flights
  • ATOL protects customers if your business fails
  • Pay £2.50 per passenger to the Air Travel Trust Fund
  • Standard ATOL requires £50,000 bond minimum
  • Small Business ATOL has 500 passenger limit per year
  • Report passenger numbers monthly or quarterly
  • Complete free CAA training for ATOL licence holders
  • Package Travel Regulations apply to all package holidays
  • Customers can cancel for free in certain situations
  • Keep records of all bookings and payments
On this page
UK-wide

Related guides in Consumer Rights

If you sell air package holidays or flights to UK consumers, you likely need an ATOL licence from the Civil Aviation Authority. If you sell package travel (even without flights), the Package Travel Regulations 2018 apply.

Selling ATOL-licensable travel without a licence is a criminal offence. Consumers also have strong cancellation rights under the Package Travel Regulations.

Understanding ATOL licensing

Do you need an ATOL?

Yes, if you:

  • Sell flights as part of a package holiday
  • Act as a tour operator selling air packages
  • Sell flight accommodation (seat-only sales in some cases)

You may not need ATOL if:

  • You only sell packages without flights
  • You act purely as an agent for an ATOL holder
  • Your packages use surface transport only (coach, rail)

Standard ATOL requirements

Most established travel businesses apply for a Standard ATOL.

How ATOL protection is funded

Consumer protection under ATOL is funded primarily through the ATOL Protection Contribution (APC) of £2.50 per licensable passenger, paid into the Air Travel Trust. Blanket bonding is no longer the standard model.

New applicants must normally provide a bond of £50,000, reducing over the first 4 years of trading (£50,000, £40,000, £30,000, then £20,000) provided the business performs satisfactorily. The CAA can also require additional security from individual ATOL holders on a case-by-case basis following its financial assessment.

Small Business ATOL

For smaller operators starting out in the travel industry.

Is Small Business ATOL right for you?

Advantages:

  • Lower application fee (see requirements above)
  • Annual APC payments instead of monthly/quarterly
  • Simpler application process

Restrictions:

  • Passenger and revenue limits apply for minimum 3 years (see above)
  • Cannot upgrade to Standard ATOL within 3 years

ATOL reporting requirements

Regular reporting is required to maintain your licence.

Accountable Person training

Every ATOL holder needs a trained Accountable Person.

Package Travel Regulations 2018

These regulations apply to all package travel, not just air packages.

What counts as a package?

A package combines at least 2 of these travel services:

  1. Transport
  2. Accommodation
  3. Vehicle hire
  4. Other significant visitor service (over 25% of cost)

Within 24 hours - services must be purchased together or through a linked booking process.

Consumer cancellation rights

Consumers have strong cancellation rights under PTR 2018.

Setting cancellation fees

Your cancellation fees must be:

  • Reasonable and reflect your actual losses
  • Justifiable if challenged
  • Clear in your terms and conditions

Most operators use a tiered structure with increasing fees as departure approaches. Your fee structure should reflect your actual costs and liabilities at each stage.

Handling complaints

You need clear processes for handling customer complaints.

ABTA and AITO membership

Membership provides access to alternative dispute resolution (ADR) and can build customer confidence.

Note: Using ABTA arbitration means customers cannot later take you to court on the same issue.